Ranging from use cases to market activity and comments on the Stellar project, Schwartz answered several questions that speak clearly on Ripple’s intentions and Schwartz’s vision for the company.

Agreeing with most analysts that payments and store of value are the most significant applications of blockchain technology, at least to begin with, Schwartz responds to the question of what are the most promising applications of the technology by saying that, beyond these, there are applications that rely on strong payments systems and stores of value,

Close to payments are use cases like securities settlement, trade finance, lending, and so on. These use cases typically involve a payment plus something else that perhaps can also benefit from blockchain and that become more feasible as payments get better. This reasoning is why Ripple focused on payments very early…Getting away from payments, the use cases can get more speculative. I’ve talked about using private blockchains with zero knowledge proofs to solve problems such as tracking the provenance of luxury goods and vaccines.

Schwartz also argues that Ripple’s Distributed Agreement System makes it difficult for the network to be subject to a 51% attack, because it would require a single entity to be given enough power by all of the other stakeholders,

Distributed Agreement Systems allow stakeholders to choose to use validators that reflect their values, and the validators that are used and trusted can easily be changed. Therefore, even in the unlikely scenario that stakeholders within the network chose to grant significant power to a single entity, if that participant proved to be a bad actor the stakeholders would simply stop using their validators, effectively stripping them of that power.

By design, XRP is an independent digital asset and transactions are validated in a completely decentralized manner through the consensus process – which means the stakeholders in the network are the ones who collectively power the transactions, not any individual or entity…While Ripple does own a portion of XRP, it does not give us control over the network – our transactions have to be approved by the validators just like everybody else’s. At the end of 2017, the company placed 55 billion of the XRP it owns into a cryptographically-secured escrow account. This squashes any concern that Ripple would flood the market with XRP at once – which, by the way, would not be good for us either.

One interesting statement made by Schwartz concerns the partnership between IBM and Stellar, a rival cross-border payments project. The latter two entities are collaborating to allow banks to launch their own stablecoins, which will be powered by the Stellar network. Schwartz, however, believes that this effort “misses the point”,

It misses the point of blockchain completely. The root problem is that global payments infrastructure is centralized – IBM, SWIFT, and the rest of the old guard attempt innovation with blockchain, but do not solve the centralization issue. IBM has positioned itself as the central operator of the Stellar network, meaning it approves all validators and therefore controls the transactions.

The use of stablecoins doesn’t make sense to me – even if all these banks got regulatory approval to issue their own stablecoins, would they all use each other’s stablecoins? Or go from their stablecoin to Lumens to the other bank’s stablecoin? With the goal of mass adoption, a universal bridge asset has to be geopolitically neutral, and a USD-backed stablecoin doesn’t solve for that. I don’t see how centralized stablecoins can be part of global pools of liquidity that anyone can contribute to and draw off of.

The Q&A session is well worth reading in full, as it provides a lot of insight into what a top Ripple executive sees happening in the space and the focus for his own particular project.

About Abhimanyu Krishnan

Abhimanyu is an engineer on paper but a writer by living. To him, the most celebratory aspect of blockchain technology is its democratic nature. While he’s hodling, he can be found reading a good book or making the local dogs howl with the sound of his guitar playing.